RCom places $1bn GSM orders

To list Reliance Globalcom in London this year

MUMBAI: Reliance Communications (RCom), the country’s second-largest mobile-phone operator, has placed orders worth $1 billion (around Rs 4,000 crore) for equipment and electronics for its global system of mobile (GSM) foray.

The company, which currently offers GSM services in eight circles, will launch its pan-India service by the end of current calendar year, chairman Anil Ambani said on Wednesday. The roll-out in the other 15 circles would be completed by mid 2009.

RCom will spend as much as Rs 25,000 crore to increase its coverage, including GSM expansions. The company added 4.8 million mobile users between January and March, taking its total to 45.8 million.

The country added a record 10.2 million subscribers in March to surpass the US as the world’s largest mobile-phone market, after China.

According to experts, the rules of the game in the Indian mobile landscape have changed significantly since December 2005 with the introduction of lifetime validity plans. These make up around 15% of the gross additions in the Indian mobile industry. Most Indian operators are aggressively expanding coverage, which is helping mobile adoption.

Experts believe India’s mobile user base will triple to 400 million by March 2010 and mobile service revenues as a percentage of GDP will rise from 0.95% in FY06 to around 2.19% by FY10.

Meanwhile, RCom will list its international business arm and subsidiary, Reliance Globalcom, on London’s AIM in the current fiscal.

Industry sources said the company would dilute more than 10% stake in Globalcom through the listing and would raise over $500 million. However, this was not independently confirmed.

Globalcom includes the operator’s submarine cable business, Flag Telecom Group Ltd and Yipes Holdings Inc, an ethernet-service provider.

Ambani is also raising money by selling a stake in Reliance Infratel Ltd that owns the operator’s telecommunications towers in the country. He agreed in July to sell a 5% stake for about $338 million to seven investors. The sale values that division at about $9 billion, Reliance said.

An initial public share sale for the unit is “awaiting favorable environment,” Ambani said. Reliance Communications will hold 85% of the tower unit after the sale, he said.

Meanwhile, RCom would soon start its direct-to-home satellite television services shortly across the country through its brand Big TV. It will provide DTH services to over 10 million subscribers in India and offer feed to over 15 million TV households.

r_mithun@dnaindia.net